Important California Labor Law Changes for 2019

Wednesday, November 21, 2018

With the new year around the corner, now is the time to prepare for new labor laws that will impact California businesses in 2019.

Among those includes a new law, signed in 2016, which raises the minimum wage incrementally, boosting it on Jan. 1 to $11 per hour for employers with 25 or fewer employees, and $12 per hour for businesses staffing more than 26 employees.

“I think a lot of companies are already paying more than minimum wage,” said Karen Alary, managing partner of The Personnel Perspective, an HR consulting firm in Santa Rosa. “Because our unemployment rate is so low and qualified workers are so difficult to come by, people could be more likely to go where there’s more money.”

Further, Alary said this is a good time for employers to examine related pay practices, including the salary-basis test that can affect the exempt classification, overtime and double-time rates of pay, as well as notice requirements, such as postings, itemized wage statement, written wage notice, and more.

Also on the wage-and-hour-increase front, agricultural employers with 26 or more employees will see the first in a series of phased-in overtime charges.

Currently, agricultural workers receive time-and-a-half after working 10 hours per day, or 60 hours per week. Under the new law, they will be entitled to collect overtime pay after 9.5 hours per day, or 55 hours per week, as laid out in a recent white paper produced by the member-based California Chamber of Commerce, known as CalChamber.

Smaller agricultural employers, those with 25 or fewer employees, will begin phased-in overtime changes in 2022.

Look for tighter laws around sexual harassment as of Jan. 1.

“It’s probably not surprising that one of the big focuses in employment law this year has been on beefing up harassment and discrimination protections,” Alary said.

Mandated sexual harassment training requirements have been in place for many years for employers with more than 50 employees, requiring them to put supervisors through two hours or harassment prevention training every two years. The new law extends training requirements to employers with at least five employees: one hour for nonsupervisory staff, and two hours for supervisory staff, every two years, Alary noted.

A new law for nursing mothers, called lactation accommodation, requires employers to provide a location other than a bathroom for women to express breast milk.

Petaluma-based Arrow Benefits Group already has the mandate in place, according to Andrew McNeil, principal.

“Over the past several years we have had numerous pregnancies at Arrow, which have resulted in new moms needing a private area to express breast milk, which we were able to provide,” McNeil said. “(The law) will make the workplace more inclusive for young working moms, which is a great thing.”

Another law that supports women in the workplace is the Gender Representation on Boards of Directors law.

“The California requirement for publicly held corporations to place at least one female director on its board by Dec. 31, 2019, is an impactful change,” said Brenda Gilchrist, co-founder of consulting firm The HR Matrix LLC. “I believe this requirement is a great opportunity for companies.”

Depending on the board’s size, up to three female members may be required by the end of 2021, and any company that doesn’t comply would face significant financial penalties.

But Gilchrist believes California employers faced a more momentous challenge already this year in the ABC test to determine if an individual is an employee or an independent contractor. The California Supreme Court adopted the law in April following its decision on Dynamex Operations West, Inc. v. Superior Court.

Under the test, to have a worker classified as a contractor, the employer must prove the following factors:

A – Is the worker free from control and direction under the contract and in fact?

B – Does the worker perform work outside the usual course of the hiring entity?

C – Is the worker customarily engaged in an independently established trade or business?

“The most significant change in the standard is that some existing 1099 workers will no longer qualify as independent contractors. So the practice of hiring an ‘extra pair of hands’ contractor to deliver services is not allowed if they do not pass the ABC test,” Gilchrist said, adding that freelancers, contractors, self-employed and employers will all be impacted. “Penalties for misclassification are stiff. Employers will need to examine their 1099s and ensure they meet the new criteria for California contractors.”